USD/CAD finds some support near 1.26 handle

   •  Goodish pickup in the US bond yields helped defend 1.26 mark.
   •  Second-tier US releases to provide some trading impetus.
   •  US crude oil inventories data to drive commodity-linked Loonie.

The USD/CAD pair now seems to have entered a bearish consolidation phase and was seen oscillating in a narrow trading range near two-month lows.

Currently hovering around 100-day SMA, the pair has managed to hold its neck just above the 1.2600 handle and was seen extracting some support from a goodish pickup in the US Treasury bond yields. However, the prevalent bearish sentiment surrounding the US Dollar has failed to assist the pair to register any meaningful recovery.

Traders now look forward to the second-tier US economic releases - weekly initial jobless claims, goods trade balance data and Chicago PMI, for fresh impetus. The key focus, however, would be on the EIA's weekly crude oil inventories, which would influence demand for the commodity-linked currency - Loonie and trigger some meaningful momentum amid pre-holiday thin liquidity conditions.

Technical levels to watch

A clear break below the 1.26 handle is likely to accelerate the fall towards 1.2570-65 horizontal support, below which the pair is likely to head towards testing the key 1.25 psychological mark.

On the flip side, a sustained recovery above 1.2630 level might trigger a short-covering bounce towards 1.2675-80 hurdle en-route the 1.2700 handle.